As a single mom, you want to do all you can to make life easier for your family. This means making sure you live in a nice home, that you have a car to drive, and that everyone is fed and clothed. This also means doing what is necessary to move into the future.
Building up credit is very important for anyone and especially important for a struggling single mom who has to make sure she supports her kids and herself. In order to move forward in life by buying new cars and a home, a single mom has to have credit that shows she can pay her bills on time.
To get started, it is a wise idea to get a credit card and use that card to create a positive credit history. Not only does this positive history help when it comes to buying a car and a home in the future, but it also helps when getting a specific job or finding a place to live. Employers and landlords may pull your credit report to see how you have performed financially. Credit reports can be a great way to prove credibility.
For the single mom who is busy and struggling, it can be difficult to manage credit accounts, so there are some steps to take to successfully do so.
Obtain Credit Reports
You can easily obtain your credit reports online for free once a year or you can visit a credit counseling or financial planning service and have them pull your reports for you. This allows you to check your report for mistakes so that you can dispute those mistakes. You are also able to see your credit score.
To know whether or not your credit score is good or bad, these are the numbers to look for: 720-850 is excellent, 680 to 720 is good, 640 to 680 is fair, and 350 to 640 is poor. If your number is below 680, you will need to work on your credit. This may mean acquiring a higher interest credit card and then later transferring your balance to a lower interest card when your credit improves. If your credit is at least 680, you can apply for a credit card that is designed for your credit. This means being able to acquire rewards cards and lower interest cards.
If you are denied when you apply for a card, this indicates that there is a credit issue that needs corrected. Maybe there is an old medical bill that needs to be paid off or you are beyond your reach and need to apply for a card that is more appropriate for your credit score. Identify the issue before applying for too many cards because every denial is recorded on your credit report as an inquiry and inquiries can have an adverse impact on the credit score you are working to build up.
Create A Budget
When you do acquire a credit card, you need to create a budget. This is where you need to be organized despite how busy your life may be. You have an income coming in, so you can decide how you want it to be distributed. List all of your expenses. In another column, propose what you want to pay on those expenses. The goal is to make sure you have enough cash to go around for your necessities, plus extra for emergencies and your savings account.
From your list, choose one of your necessary items to charge to your credit card. This is the alternative to charging something that you are denying yourself. Charging something that you want rather than something you need can cause more issues. One wanted item becomes two and so on. By making sure you only charge your needed items that you could pay for anyway, you prevent yourself from running yourself into extreme debt.
After you open your accounts and start charging, you need to monitor them, Make sure you don’t have more than three because it becomes difficult to monitor your credit if you have lots of account. This means stay away from the department store accounts with high interest. It can be tempting to get the discount, but the discount is a drop in the bucket compared to the interest that will be charged.
The best way to keep an eye on accounts is to keep a chart that shows due dates, the amount due, and the date the payment was paid and how much. You also want to record your balances so you know how much your payments should be. By doing this, you ensure you make your payments on time and that you actually pay your balances down. Try to make a payment that is higher than your minimum payment. In fact, it is best to pay off your balance every time you charge something. Your credit will improve greatly by doing this.
Overall, organization is very important. If you reach a point where life becomes chaotic, you have to stay afloat. This means you will turn to your budget, trim where you need to, and then adjust elsewhere. If you feel yourself dipping below the waves, a credit counseling agency can help you. Simply request an appointment and receive the assistance you need.
This will help you preserve your credit because you and your children have to be able to move forward somehow. Keeping few accounts is another reason why it is important to not have too many credit accounts. If you don't have too many accounts and you are paying more than the minimum payment, then the only adjustment should be to make the minimum payment while you need to and then increase that payment when times start getting better.
In the end, the struggling single mom can turn things around through a small credit card account or two and good account management. When you can train yourself to manage the small bills, you will better be able to handle the larger credit bills in the future. This will make life much better for you and your children.